For investors looking for high-yielding dividend stocks to buy, the highest dividend payers in the Dow Jones Industrial Average (DJIA) is a common starting point. Below is a list of the 10 highest yielding Dow stocks.
Today, the average yield of the 10 highest-yielding Dow Jones Industrial Averages stocks is 4.00%. You can see their individual yields in the table below. Click the company name for more information on each stock. To view the entire list of Dow stocks ranked by yield, click here.
Highest Yielding Dow Jones Industrial Average Stocks
|Company Name||Dividend Yield|
|Chevron Corp. (CVX)||5.64%|
|International Business Machines Corp. (IBM)||5.27%|
|Dow Inc. (DOW)||4.88%|
|Verizon Communications (VZ)||4.56%|
|Walgreens Boots Alliance Inc. (WBA)||3.75%|
|Merck & Co. (MRK)||3.46%|
|Coca-Cola Co. (KO)||3.29%|
|3M Corp. (MMM)||3.28%|
|Amgen Inc. (AMGN)||2.96%|
|Cisco Systems Inc. (CSCO)||2.94%|
Selecting dividend stocks on the basis of dividend yield alone hasn’t been a winning investment strategy historically. As we pointed out in our post on the highest yielding S&P 500 stocks, a strategy that buys stocks with the highest yields in the market underperforms a strategy that buys companies with above-average yields.
Why the Highest-Yielders Underperform
The reason the highest-yielders underperform? Low quality and dividend cuts. Companies with the highest yields may be lower quality businesses or the companies most at risk of slashing their dividends.
Does investing in the highest-yielding Dow stocks have similar drawbacks? In some sense it does, but Dow stocks are essentially a pre-screened list of 30 of the biggest most established blue-chip stocks traded in the U.S. When a Dow stock has a high-yield, it may be a sign of value as opposed to a signal of risk. That is not always true, as investors who owned shares of former Dow component General Electric in 2017 can testify.
The historical record does show that buying the highest yielding Dow stocks is a better strategy than buying the highest yielding stocks in the broader market.
Historical Performance of Dow Highest Yielders
Investing in the 10 highest-yielding Dow stocks each year and rebalancing annually is known as the Dogs of the Dow strategy. The strategy was pioneered and popularized by Michael B. O’Higgins.
Since year-end 1997, the Dogs of the Dow strategy has kept pace with the Dow Jones Industrial Index. Obviously buying only 10 stocks isn’t the best way to diversify a stock portfolio. The Dogs of the Dow Strategy we back-tested has about the same return as the Dow Jones Industrial Average, but it is more volatile and it has more single stock risk.
Table: Dogs of the Dow Performance vs. Dow Jones Industrial Average
|Year||Dogs of the Dow Strategy||Periodic Return (INDU)|
At Young Research, we advise many of the highest-yielding Dow Stocks in our Retirement Compounders® Strategy (RCs). The RCs is a more diversified portfolio (more than 10 stocks) of global companies that not only pay high dividends but are also likely to increase their dividends over-time.
The 10 Highest Yielding Dow Jones Industrial Average Stocks
Chevron Corp. (CVX) • 5.64%
Chevron is one of the world’s leading integrated energy companies. The company is involved in virtually every facet of the global energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power, and develops and deploys technologies that enhance business value in every aspect of the company’s operations.
Incorporated in 1911 as the Computing-Tabulating-Recording Company (C-T-R), in 1924, C-T-R became International Business Machines Corporation (IBM). Today IBM is the world’s largest information technology company and the 8th largest corporation in the world.
Dow Inc. combines one of the broadest technology sets in the industry with asset integration, focused innovation and global scale to achieve profitable growth and become the most innovative, customer-centric, inclusive and sustainable materials science company. Dow’s portfolio of performance materials, industrial intermediates and plastics businesses, delivers a broad range of differentiated science-based products and solutions for our customers in high-growth segments, such as packaging, infrastructure and consumer care. Dow operates 113 manufacturing sites in 31 countries and employs approximately 37,000 people.
Verizon Communications is a global communications and technology leader active in 4G and 5G wireless networks, broadband and fiber optics, video and advertising platforms, and internet of things.
Walgreens Boots Alliance (Nasdaq: WBA) is a global leader in retail and wholesale pharmacy, touching millions of lives every day through dispensing and distributing medicines, its convenient retail locations, digital platforms and health, and beauty products. The company has more than 100 years of trusted health care heritage and innovation in community pharmacy and pharmaceutical wholesaling. Including equity method investments, WBA has a presence in more than 25 countries, employs more than 440,000 people and has more than 18,750 stores.
Merck & Co. (MRK) • 3.46%
For more than 125 years, Merck, known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the world’s most challenging diseases in pursuit of our mission to save and improve lives. We demonstrate our commitment to patients and population health by increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at the forefront of research to prevent and treat diseases that threaten people and animals – including cancer, infectious diseases such as HIV and Ebola, and emerging animal diseases – as we aspire to be the premier research-intensive biopharmaceutical company in the world.
Coca-Cola (KO) • 3.29%
The Coca-Cola Company (NYSE: KO) is a total beverage company, offering over 500 brands in more than 200 countries and territories. In addition to the company’s Coca-Cola brand, our portfolio includes AdeS, Ayataka,
Costa, Dasani, Del Valle, Fanta, Georgia, Gold Peak, Honest, innocent, Minute Maid, Powerade, Simply, smartwater, Sprite, vitaminwater and ZICO. We’re constantly transforming our portfolio, from reducing sugar in our drinks to bringing innovative new products to market. We’re also working to reduce our environmental impact by replenishing water and promoting recycling. With our bottling partners, we employ more than 700,000 people, helping bring economic opportunity to local communities worldwide.
3M Co. is a technology company, which manufactures industrial, safety and consumer products. It operates through the following five segments: Industrial, Safety & Graphics, Health Care, Electronics & Energy, and Consumer. 3M’s success is driven by our 93,000 3Mers in 87 countries who work across a network of business segments and areas.
Amgen Inc. (AMGN) • 2.96%
Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology. Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that improve health outcomes and dramatically improve people’s lives. A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.
Cisco Systems Inc. (CSCO) • 2.94%
Cisco (Nasdaq: CSCO) is the worldwide technology leader that has been making the Internet work since 1984. Our people, products and partners help society securely connect and seize tomorrow’s digital opportunity today.
|International Business Machines Corp.||IBM||5.27%|
|Verizon Communications Inc.||VZ||4.56%|
|Walgreens Boots Alliance Inc.||WBA||3.75%|
|Merck & Co. Inc.||MRK||3.46%|
|The Coca-Cola Co.||KO||3.29%|
|Cisco Systems Inc.||CSCO||2.94%|
|JPMorgan Chase & Co.||JPM||2.57%|
|Johnson & Johnson||JNJ||2.45%|
|Procter & Gamble Co.||PG||2.45%|
|Travelers Cos. Inc.||TRV||2.33%|
|Honeywell International Inc.||HON||1.82%|
|Goldman Sachs Group Inc.||GS||1.67%|
|UnitedHealth Group Inc.||UNH||1.54%|
|American Express Co.||AXP||1.34%|
|The Boeing Co.||BA||0.0%|
|The Walt Disney Co.||DIS||0.0%|